Cryptocurrency traders are continuing to face fallout from the Terra blockchain crash.
Now that Terra 2.0 has launched—with the old LUNA cryptocurrency renamed to Luna Classic, or LUNC—the new LUNA token on the Terra blockchain was trading at $8.51 as of this writing, while LUNC was trading at $0.0001.
This substantial price discrepancy enabled an exploit yesterday in which an attacker reportedly drained more than $2 million from Mirror Protocol.
Mirror Protocol is a Terra DeFi project with an Ethereum token MIR, which is down more than 9% over the last 24 hours. On Mirror, users can trade synthetic versions of real equities, like shares of Amazon or Apple.
But an issue with Terra Classic validators caused a mixup in the oracle’s price reporting of LUNC, listing LUNC’s price as LUNA’s.
The error reportedly occurred because many Terra Classic validators weren’t running an updated version of the price oracle.
In short, that stark price difference enabled the attacker to use the inflated crypto to mint synthetic assets and then sell them for UST and USDC. As one user explained on Discord, the exploit caused some of Mirror’s assets to plummet.
Following the reported attack, Mirror is now seeing dramatic differences between the Pool Price and Oracle Price of mBTC, mDOT, mETH, and mGLXY. Image: mirrorprotocol.app
Early Tuesday morning, FatManTerra reported that Mirror had disabled the use of mBTC, mETH, mGLXY, and mDOT as collateral to prevent further liquidity from being drained.
As Mirror struggles to restabilize, an ambassador for Chainlink argued that the exploit could have been avoided, writing on Twitter: “This issue was 100% preventable as soon as the decision was made to rebrand $LUNA to $LUNC though proper coordination and management of the oracles.”
The Mirror Protocol team did not immediately respond to requests for comment from Decrypt.
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